How do you start an eBay Business?

16. November 2016 eBay, start up 0

We often get emails from people who are interested in starting an eBay business and we are happy to help. Often they have read the articles about us in the Telegraph and the Guardian.

Why not? eBay has a low barrier to entry and a ready made mass market of buyers. What’s not to like as they say.

Let me tell you.

The very reasons that make it attractive make it massively competitive, meaning you will have to have a solid business plan before you start. We will cover it in a later post but this is the time to consider why you are setting up this business – will you simply make a living or do you want to build something valuable that you can sell at some stage?

Setting up a legitimate, tax paying scalable on-line business means you will be competing with lots of people working from home, not registered for VAT and more than likely not employing staff. In other words low overheads which means they can sell at very low prices. You may even be competing with sellers in another low cost economy!

To make a sustainable living (unless you own a recognised brand or a unique product) you will need to go the other way and from the outset plan to have a professional business that buyers, partners (I include eBay themselves in this), and suppliers can feel happy to do business with.

Key things to consider:

What will I sell?

Where will I get it from?

Start at the beginning. What to sell? This is even more critical than you might think. Is the niche you are considering overcrowded? Is there room for a start up who may not be able to buy in enough volume to get the right discounts? Is the category you are considering prone to high return rates – such as clothing? How about fraud risk? Tech categories sell well but can be attractive to fraudsters and is a category which attracts poor feedback from buyers. Few start ups have the money to invest so if you do, you might consider higher priced products or larger volumes (to get discounts).

Where will I get it from? The choices you have are manufacturers, brand owners, distributors, drop-shippers or retail outlets.

Firstly retail outlets aside from the higher cost will guarantee the product to you – the original buyer, they will not offer a guarantee to your customer and eBay would consider these items as used not new. So avoid this.

Drop-shippers could destroy your reputation on day one – avoid them.

Distributors will have added their margin and so are very likely to be un-competitive unless they are the only channel for that product.

Brand owners will probably not sell to you unless you have a recognised business with a bricks and mortar store.

So if you can talk to the manufacturers this is likely to be the best route.

Will they sell to me? Interestingly you need to find manufacturers who have a high barrier for new stockists. This means they won’t sell to just anyone including the sellers with low overheads we mentioned above. It’s possible they could only supply you if you are VAT registered, have a store front and they are likely to have a high minimum order value.

For these reasons, before you approach suppliers it’s a good idea to have a business plan (that you would be willing to share with them), a web presence, professional email address and a good idea of how you will market their products. They will not welcome new stockists who could well go to the market with low prices and upset existing loyal stockists. Be prepared to put your money where your mouth is and offer to buy a good quantity in return for a discount.

Shows such as the Spring Fair and the Autumn Fair are great places to meet and talk to new suppliers.

Be willing to travel to meet with new suppliers – they will appreciate the effort.
 




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